Ian Cowie was named Consumer Affairs Journalist of the Year in the
London Press Club Awards 2012. He has been head of personal finance at
Telegraph Media Group since 2008, having been personal finance editor
since 1989. He joined the paper in 1986. He is @iancowie on Twitter.

Pensions apartheid: a £20bn gap between private and public sector retirement plans

While the terminology may sound technical, making the wrong decision could dramatically reduce many people’s standard of living in retirement. That is why the regulator has published a consultation paper today, outlining proposals to change the way pension transfer analysis is carried out.

Sheila Nicoll, a director of the FSA, said: “The FSA estimates that the changes to the way transfer valuations are performed will prevent an undervaluation of benefits of up to £20bn. In other words, the changes mean that transfer values may have to increase before an adviser recommends a transfer.

"The starting point is always that a transfer will not be in the client’s best interests. It is vital that employees get a fair deal as more and more employers are looking to reduce liabilities by offering members of defined benefit schemes a move to a personal pension.

“As things stand, there is a high risk members receive unsuitable advice as a result of the mechanistic approach to analysing transfer values taken by some advisers. These changes are important to make sure that members’ interests are at the centre of any decision to transfer and that any advice to transfer is suitable.

“We have seen examples of advisory firms recommending a transfer when there is little or no justification to do so, or where the reasons given for an individual to transfer have nothing to do with their particular circumstances.”